Microfinance Company Registration

Register your Microfinance Company online

Starting At Rs.1,90,000-/ (inclusive all taxes & fees)..!!!

Microfinance registration by section 8 Company,

No RBI Approval,

(Takes 25 to 30)

Micro Finance Registration

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Procedure For Microfinance Company

NAME APPROVAL APPLICATION

Details given by you will be checked and then we will apply for name approval.

 

DSC (DIGITAL SIGNATURE)

After submitting your documents we will give you DSC and DPIN.

 

APPLY FOR DIN

Director Identification Number is a Unique Number that is given to Existing Directors of Incorporated Companies.

CERTIFICATE OF INCORPORATION

File for Incorporation Certificate will be forming with CIN, PAN & TAN.

PAN AND TAN APPLICATION

Apply for PAN & TAN as they will be needed for opening a bank account.

What is a Micro Finance Company?

The Microfinance Company is essentially the financial organizations that provide small-scale financial services in the form of loan, credit, or savings. These organizations are acquainted with facilitating the credit framework for independent ventures as they don’t get a loan from banks because of their perplexing process. In this way, it is ordinarily named as a Micro-credit association. They provide small loans to varied small businesses or households that do not approach to formal banking channels or eligibility for loans. They provide small loans that are under Rs.50,000 for rural areas and for urban it is Rs.1,25,000. Registering the Section-8 Company with MCA (Ministry of Corporate Affairs) is the easiest way to register a Micro Finance Company in India. Without charging any peripheral cash or assurance security. It can give credits at reasonable rates coordinated by the RBI and central government. They are a colossal help to all country and farming development including income and employment creation. There are essentially 2 kinds of microfinance organizations that are permitted in India, one is which has to be registered with the RBI and another is the non-benefit type, which is enlisted as section 8 company and does not need RBI approval

Documents Required For Company Registration

  • PAN card: In the case of Indian citizens, the PAN card of shareholders and directors.
  • Passport size photograph: Not more than 10 months old photograph of directors and shareholders.
  • ID proof: Copy of Aadhaar card/voter identity card/passport/driving license of directors and shareholders
  • Rent agreement: If you have rented property, then a copy of the rent agreement
  • Address proof: Electricity bill, water bill, bank statement, gas or telephone bill of shareholders and directors
  • Registered office proof: Electricity bill, water bill, bank statement, gas or telephone bill of the registered office address
  • NOC from the owner: No objection certificate is needed from the owner of the registered office

What is Included In Our Package?

DIN for 2 Partners

Digital Signature For 2 Directors

Name search & approval

MOA/AOA

Registration Fees

Company Pan Card

How to register the micro-finance Companies in India?

The microfinance can be enrolled in India by Section 8 Company. Section 8 does not need any base capital. Here is the process:

Prepare DSC & file for Name Approval:

The initial step is to apply DSC and DIN. This sets aside some time for 1-2 days. It is utilized for making the online structures, filed with ROC for Incorporation Of Company. DSC can’t be utilized in Physical Documents. The Company Registration within the method is completely online and so it needs DSC to incorporate an organization. From that point, you require filing for name approval. Name Applications under RUN will be prepared by the Central Registration Centre (CRC). The Name Approval is liable to finish check by the CRC and from there on Approval or Rejection must be conveyed by E-Mail to the Applicant. The name should be of one kind and must end with words like establishments, Sanstha, etc. Additionally, a maximum of 6 names can be filed at one time.

Apply for DIN:

Director Identification Number – DIN is a Unique Number that is provided to the Existing Directors of Incorporated Companies. This recognizable number is given by the Central Government to any person, intending to be appointed as Director or to any Existing Director of a Company. Once Got DIN Number, the Director can apply the equivalent forever life irrespective of the company he/she works in. On the off chance that you change the organization, it doesn’t change the DIN Number.

Certification of Incorporation:

The third step is to file the joining alongside every single vital paper. The form is joined with all the fundamental attachments like MOA, AOA, declarations, and so on. The incorporation certificate must frame with CIN, PAN, and TAN. The organization needs to pay the Stamp Duty Irrespective of the Capital as Stamp Duty is a state subject. When the organization is consolidated, you can begin the microfinance business in India. But, please recall that you cannot make any deposit under section 8. After that promptly apply for PAN and TAN as they will be required to open A Bank Account.

Why to register for Microfinance company?

Some of the working mechanisms of micro-finance companies are as follow:

  • Promoting socio-economic growth: At the community level, the microfinance organization will promote socio+ecomic development. Additionally, enabling self-improvement groups alongside with encouraging manageable development by them. A variety of other financial services will be required by the poor and not simply credits; thus, it is an integral asset to take out the neediness factor.
  • No RBI Approval: No long techniques and simple to register as there is no RBI endorsement required when you register as a non-profit company. Even, there is no requirement for the least capital of Rs. 2 Crores.
  • Provide a way to funding: It gives a superior overall loan repayment rate than conventional financial products. Further, which will help in addressing credit requirements for such a population range from consumer loans, business loans, working capital loans, emergency loans, housing, etc
  • Offers reasonable services for small businesses: It centers on building a financial system for the poor and jobless and aims to make permanent local financial institutions that try to attract domestic deposits, recycle them into loans, and give other financial services.
  • Minimum Compliances: The company is relied upon to follow with RBI guidelines regardless of whether it can’t enlist with the reserve bank. In any case, no endorsement from RBI is required. Section 8 company will comply with the Companies Act the same method as other companies do. That’s all!

Micro-credit loans under Micro Finance Company

Loans under microfinance companies are not exceptionally complicated. Most unsecured loans are given and against month to month repayments or week by week repayments. Interest is charged frequently in the scope of 20 -26%. Other than the accompanying focuses are also significant which are as per the following:

  • NBFC can force a differential rate of interest to its clients however change must not be over 4%.
  • The interest on the loan to be charged on a diminishing balance strategy.
  • Microfinance companies to appear in all the workplaces or literature, the viable rate of interest.
  • Companies must issue a loan card to all individuals saying the interest rate, every extraordinary terms & condition.
  • Loans are also likewise given in self-improvement groups (SHG) and connection programs.
  • On the off chance that no repayment is gotten within 90 days, at that point the equivalent must be treated as a non-performing resource, however, provisioning norms do not make a difference to section 8 company.

Advantages of Micro Finance Company

No minimum capital of 5 Cr

No RBI approval

Easiest way to start finance business

Can charge up to 26% rate of interest.

NO RBI APPROVAL

In India, finance businesses are endorsed distinctly to Non-Banking Finance Companies (NBFC) and directed by RBI. Be that as it may, some business structures have been conceded exclusion by the Reserve Bank of India (RBI) to do banking activities up to a predetermined verge of collapse. The RBI by its master roundabout: RBI/2015-16/15 DNBR (PD) CC.No.052/03.10.119/2015-16 Dated July 01, 2015, has discharged all Section 8 Companies engaged with microfinance activities.

According to Para 2 (iii), Sections 45-IA, 45-IB, and 45-IC of the Reserve Bank of India Act, 1934 (2 of 1934) must not have to any significant financial company which is included in activities:
(a) Engaged in micro-financing activities, giving credit not more than Rs. 50,000 for a business venture. Furthermore Rs. 1,25,000 for meeting the expense of a lodging unit to any destitute individual for letting him raise his level of income and way of life.
(b) Licensed under Section 8 of the Companies Act, 2013
(c) Not accepting public deposits as described in passage 2(1) (xii) of Notification No. 118 /DG (SPT)-98 dated January 31, 1998.

Mandatory Requirements for Micro Finance Company

There are typically 2 methods to register the Micro Finance Institution (MFI). The first is to form a company and to apply to RBI for approval. The minimum requirement for a Microfinance Company is Rs.5 crore net owned fund and active profiles of investors. Secondly, is to register a section 8 company.

LegalRaahi provides the second method of enrollment. Apply for central government licenses advantages of which are the following:

  • The maximum Rs.50,000 can be given for business motives and Rs.125,000 for household dwelling.
  • No least net owned fund requirement. You can select on your own
  • No RBI approval is required since RBI has free from this company from registration and some other conditions.

Acceptance of Deposits under Micro Finance Company

Deposits are not allowed to be acknowledged under section 8 company. Also, the organization needs to contribute its assets and start your microfinance company. Further, the organization may likewise raise funding by methods for gifts.

Regardless of whether you are planning to enroll an NBFC company and prepare to invest Rs.5 Crore into the business, at that point additional deposits are not permitted to be taken. According to the RBI procedure, first, you require to enlist an NBFC non-deposit-taking company and thusly apply for deposit-taking status from the Reserve Bank of India (RBI).

Hence, it exhorted in the event that you thinking to register your own NBFC, first begin with a Microfinance Company, test your skills and then move forward deposits are not permitted to be accepted under section 8 company. Moreover, the company has to invest its funds and start your microfinance company. Further, the company may also raise funding by way of donations.

Even if you are intending to register an NBFC company and ready to invest Rs.5 Crore into the business, then also deposits are not permitted to be taken. As per the RBI procedure, first, you require to register an NBFC non-deposit-taking company and consequently apply for deposit-taking status from the Reserve Bank of India (RBI).

Hence, it advised if you thinking to register your own NBFC, first start with a microfinance company, test your skills and then move forward.

Type of Legal Structure for Microfinance Company Registration

Particulars

NBFC-MFI

Societies and Trust

Section 8 Company

Cooperative Society

Govern byAs per the Companies Act, 2013 with the Reserve Bank of IndiaSociety Registration as per Society Registration Act, 1860 and Trust Registration as per Indian Trust Act, 1882Registration as per Companies Act, 2013Registration as per the Cooperative Societies Act, 2002
Net Worth RequirementRs. 5 Crore and Rs. 2 Crore in case of North East StatesNo Minimum RequirementNo Minimum RequirementNo Minimum Requirement.

 

Mandatory Compliances for Micro Finance Company

There are minimum compliances which are to comply by the Micro Finance Company, however, the most important compliances are as follows:

RBI Compliance:

The company is expected to comply with RBI norms even if it is not required to register with the reserve bank.

Company Act:

Section 8 company also required to comply with the Companies Act, in the same way, other companies.

Additional:

There are other laws as well which are to be taken care of like PMLA etc if talk about the mandatory compliances.

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Frequently Asked Questions

What is a microfinance company?
How to get a microfinance company registered?
Which documents are required to register microfinance companies?
What are the benefits of registering a microfinance company?
What is the registration fee of the Microfinance Comapny?
Can Microfinance companies provide loans for the personal use of borrowers?
Does the Prepayment penalty be imposed by Microfinance companies?
What are the limitations of interest rate & loan processing charges of Microfinance companies?
fix-nav-title="FAQs">
What is a microfinance company?
How to get a microfinance company registered?
Which documents are required to register microfinance companies?
What are the benefits of registering a microfinance company?
What is the registration fee of the Microfinance comapny?
Can Microfinance companies provide loans for the personal use of borrowers?
Does the Prepayment penalty be imposed by Microfinance companies?
What are the limitations of interest rate & loan processing charges of Microfinance companies?